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If you’re just getting into a home business, or if you’re starting a new venue for your current business, one of the first questions that needs to be answered is “how much do I charge for my product or service?”

There is a formula that helps figure how to set your prices; however the formula is just part of the means of setting the prices.

Your knowledge + your time + your expenses = price to place on the product or service.

How much knowledge do you bring to the table? Years of alteration work, or years of making bridal gowns for family and friends? How long does it take to make those beautiful little Sugar Bear Dolls? And probably the most important item of all is how much money do you have invested in supplies to make those craft items?

Do some basic research of your surrounding area, or local craft fairs that come to town to determine what others are charging for similar type items. You have to be able to make a profit or it isn’t worth your time and effort regardless of how much fun you might have making those items.

An important thing to think about when doing your research about pricing is to see how many people are selling the same or very nearly the same type of items you have in mind to make. For example, when we’re at our craft fairs, we’re the only ones selling tropi-coolers (and we’re the only ones staying cool by wearing one!!). You’d think we could charge through the nose for these and make a bundle —- NOT! Our charge is based on the formula stated above to give a fair price to the customers and a fair profit to us. We even have available a little bowl of ice water to get the tropicooler ready for the customer to wear immediately if they request us to do that.

By working out of your home you would be able to cut some overhead expenses, rather than renting a warehouse or building somewhere to do your crafts or sewing. However, even working at home you have to consider your time to make the items, or to perform the alteration services, and of course the amount of money spent for supplies. Do your research carefully so you don’t end up charging such a high price that people will look elsewhere for that product or service, and you don’t want to be so cheap that you are working yourself to death to make a quarter or two. People need to perceive a value of what you have to offer, and you need a fair profit for your work.